By Chris Gunn
October 7, 2010
In 1999, GTSI, a Top 50 government contractor reported that it was no longer a small business for the purposes of government contracting. Yet from fiscal year (FY) 2004 to FY 2010, GTSI received more than $1.18 billion in federal small business contracts. Data from the Federal Procurement Data System – Next Generation (FPDS-NG) indicates that GTSI received as much as $268 million a year in small business contracts over the 7-year period.
The company’s 1999 annual report to the Securities and Exchange Commission (SEC) stated, “As a result of the acquisition of the BTG Division in February 1998, GTSI no longer qualifies as a small business for contract awards after February, 1998.” The company reiterated that statement in its 2000 report.
On October 1, the Small Business Administration (SBA) suspended GTSI from federal contracting programs. The suspension came as the result of government allegations that the company inappropriately gained access to contracts set aside for small businesses.
Section 16(d) of the Small Business Act, prescribes penalties of up to $500,000 and up to 10 years in prison for firms that misrepresent themselves as small businesses in order to illegally receive federal small business contracts.
Since 2003, more than a dozen federal investigations have uncovered billions of dollars a year in federal small business contracts flowing into the hands of corporate giants around the world. The most recent information released by the Obama Administration indicates that of the top 100 recipients of federal small business contracts, 65 percent of the dollars actually went to large businesses.
Large businesses included in the Obama Administration’s small business data include: Lockheed Martin, Boeing, British Aerospace (BAE), Rolls-Royce, Raytheon, Dell Computer, and General Electric.
In Report 5-15, the SBA’s Office of Inspector General referred to the diversion of federal small business contracts to corporate giants as, “One of the most important challenges facing the Small Business Administration and the entire Federal government today.”
“This is a serious federal crime that carries a penalty of up to 10 years in prison. The fact that the SBA waited almost 12 years to suspend GTSI after they admitted that they were not a small business, is proof they are assisting these large firms in high-jacking small business contracts. It is time for the Justice Department to step in and take over the investigation from the SBA,” ASBL President Lloyd Chapman said.
Chris Gunn is Communications Director at the American Small Business League. The views in this guest editorial are the author's own.
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